Question

Deleon Inc. is preparing its annual budgets for the year ending December 31, 2020. Accounting assistants furnish the data shown below. Product JB 50 Product JB 60 Sales budget: Anticipated volume in units 403,200 203,400 Unit selling price $22. $21 Production budget: Desired ending finished goods units 26,700 19.700 Beginning finished goods units 32,500 11.4 Direct materials budget: 2 Direct materials per unit (pounds) Desired ending direct materials pounds Beginning direct materials pounds Cost per pound 34,300 44,300 Direct labor budget: Direct labor time per unit Direct labor rate per hour Budgeted income statement: Total unit cost

Answer 1

Solution:

Sales Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Expected unit sales	403200	203400
Selling price per unit	$22.00	$28.00
Projected Sales Revenue	$8,870,400.00	$5,695,200.00	$14,565,600.00

Production Budget - Deleon Inc.
Particulars	JB50	JB60
Expected unit sales	403200	203400
Add: Desired ending inventory	26700	19700
Total required units	429900	223100
Less: Beginning Inventory	32500	11400
Budgeted production units	397400	211700

Material Purchase Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Budgeted production units	397400	211700
Material required per unit (In pound)	2	2
Total material requirement	794800	423400
Add: Desired units of material in ending inventory	34300	19500
Total material required	829100	442900
Less: units of material in beginning inventory	44300	11200
Budgeted purchase of raw material (In pound)	784800	431700
Cost per pound	$3.00	$3.00
Budgeted purchase of raw material	$2,354,400.00	$1,295,100.00	$3,649,500.00

Direct labor Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Budgeted production units	397400	211700
Direct labor hour per unit	0.4	0.6
Total direct labor hours	158960	127020
Direct labor rate per hour	$12.00	$12.00
Budgeted Direct labor cost	$1,907,520.00	$1,524,240.00	$3,431,760.00

Budgeted Income Statement - Deleon Inc. For the year ended Dec 31, 2020
Particulars	JB50	JB60	Total
Sales Revenue	$8,870,400.00	$5,695,200.00	$14,565,600.00
Cost of goods sold JB 50 - 403200*$13 JB 60 - 203400*$21	$5,241,600.00	$4,271,400.00	$9,513,000.00
Gross Profit	$3,628,800.00	$1,423,800.00	$5,052,600.00
Operating Expenses:
Selling Expenses	$663,000.00	$364,000.00	$1,027,000.00
Administrative expenses	$542,000.00	$341,000.00	$883,000.00
Total Operating expenses	$1,205,000.00	$705,000.00	$1,910,000.00
Operating Income	$2,423,800.00	$718,800.00	$3,142,600.00
Interest expense			$150,000.00
Income before taxes			$2,992,600.00
Income tax expense (30%)			$897,780.00
Net Income			$2,094,820.00